I want to invest in gold ETF. Is it better than buying gold? Do I need to open a Demat account for gold ETF?

—Manish Adhikari

Gold ETFs are ‘Exchange traded Funds’ which are equivalent to mutual fund units. Each unit is equivalent to 1 gm of gold but some fund houses have 0.5 gm of gold as one unit. The price is almost half per unit for these fund houses’ gold ETFs.

Yes, you need to have a Demat account. Gold ETF can be bought or sold just like mutual funds using your regular Demat account with any depository. The NAV is displayed periodically for the gold ETF just like mutual funds. The gold behind the ETF has a quality of 99.9%. This means you do not have to worry about the quality aspect. Buying gold from outside is fraught with risk as you have to rely on the goodwill of the seller.

In the case of Gold ETFs, investors are freed from the headache of worrying about the quality, safety, transparency in price and resale value. They are also very liquid compared to physical gold as the physical gold has to be taken to the buyer and sold. The other advantage is that you do not need lot of money to invest in a gold ETF. It is also more tax efficient compared to physical gold. You need to keep physical gold for three years to claim long-term benefits while the tenure is just one year in case of gold ETFs.

Kotak Gold ETF, UTI Gold ETF, and Reliance Gold ETF are some of the examples of gold ETFs in the Indian market.

I use my credit card often and in the last two years, I have run up a huge bill, almost crossing my limit. Now, I am paying my dues on time. Few months ago I applied for an increase in the credit limit but it was rejected. How can I increase the limit of my existing credit card?

—Akash Deep

Credit card companies have become very strict in the past few years due to increasing number of defaults. Hence, if your repayment track record for credit card dues has not been good and prompt in the past, this will definitely hinder your chances of getting a higher credit limit. Also, your current income and other loan commitments will also have an impact on the maximum amount you are allowed